For the given CFD if the MARR (i)=-13%, the Net Present Worth, NPW is close to: 1 -$7,000 Benefits $2,000 Apenas $4,000 Costs $3.000 OA $-5202 OB. $3300 OC. $4711 OD. None of them. OE. $4200 $12,000 Years $3,500 $4,800
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- Armor Investment Company is considering the acquisition of a heavily depreciated building on 10 acres of land. It expects to rent the building as a storage facility and expects to collect cash flows equal to $100,000 next year. However, because depreciation is expected to increase, Armor expects cash flows to decline at a rate of 4 percent per year indefinitely. Armor expects to earn an IRR on investment return (r) at 13 percent. a. What is the value of this property? b. Assume that after 5 years the building could be demolished and the land could be redeveloped with a strip retail improvement. The latter would produce NOI of $200,000 per year, grow at 3 percent per year, and cost $1 million to build. Investors currently earn a 10 percent IRR on such investments. How would this affect your estimate of value in (a)?Consider three investment plans at an annual rate of 9.38%. • Investor A: Invest $2000 per year for the first 10 years of your career. At the end of 10 years, make no further investments, but reinvest the amount accumulated at the end of 10 years for the next 31 years. • Investor B: Do nothing for the first 10 years. Then start investing $2000 per year for the next 31 years. • Investor C: Invest $2000 per year for the entire 41 years. Note that all investments are made at the beginning of each year, the first deposit will be .made at the beginning of age 25 (n=0), and you want to calculate the balance at age of 65 (n=41).Mahmud Hassan inherited $250,000 from a great uncle, and immediately quit his software engineering job to start his own catering business, BigM’s Catering (BigM). Mahmud had been earning $125,000 per year as a software engineer. If Mahmud had NOT started BigM, he could have invested the money in a friend’s tech start-up company and earned a guaranteed return of 15%. However, Mahmud loves food and wanted to work for himself. The catering business’s accounts for 2020 are as follows (assume NO income taxes): Revenue $600,000 Cost of goods sold 250,000 Salaries expense 100,000 Advertising expense 65,000 Rent expense 50,000 Required: Identify the name of the costs that accountants typically concentrate on and the name of the costs that economists typically concentrate on. Determine BigM’s accounting profit for 2020. Determine BigM’s economic profit for 2020. Determine if BigM is a successful business and explain whether Mahmud made a good choice.
- Charlie has a project for which he had determined a present worth of $56,620. He now has to calculate the IRR for the project, but unfortunately he has lost complete information about the cash flows. He knows only that the project has a five-year service life and a first cost of $190,000, that a set of equal cash flows occurred at the end of each year, and that the MARR used was 10 percent. What is the IRR for this project?Let's consider a company is evaluating a potential investment project: The Project requires an initial investment of $50, 000 and is expected to generate cash inflows of $20, 000 per year for the next four years. The company's required rate of return is 8%. 1. Calculated the IRR(perpetuities) A man planned of building a house. The cost of construction is Php 550,000, while annual maintenance cost is estimated at Php 10,000 . If the interest rate is 7.23%, what is the capitalized cost of the house? Round your answer to 2 decimal places
- Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $850 at the end of each of the next 5 years, then an additional lump sum payment of $12,000 at the end of the 5th year. What is the expected rate of return on this investment?A small company purchased now for $23,000 will lose $1,200 each year for the first 4 years. An additional $8,000 invested in the company during the fourth year will result in a profit of $5,500 each year from the fifth to the fifteenth year. At the end of 15 years, the company can be sold for $33,000.a. Determine the IRRb. Calculate the FW if MARR = 12%c. Calculate the ERR when є = 12%.What is the IRR for an investment of $X that returns $Y at the end of each year for Nyears? X=$11,040 Y=$992.25 N=41 years
- Joey is one of several winners who shared a lottery ticket. There are three plans offered to receive the after-tax proceeds.Plan 1: $100,000 nowPlan 2: $15,000 per year for 8 years beginning 1 year from now. Total is$120,000.Plan 3: $45,000 now, another $45,000 four years from now, and a final$45,000 eight years from now. Total is $135,000.Joey, a quite conservative person financially, plans to invest all of the proceeds as he receives them. He expects to make a real return of 6% per year. Use the 8-year time frame and an average inflation of 4% per year to determine which plan provides the best deal.A loan of P50T whose interest is 15% compounded semiannually, is to be discharged by a series of 10 semiannual payments, the 1st payment to be made 6 months after consummation of the loan. The 1st 6 payments will be P5T each, while the remaining 4 payments will be equal & of such amount that the final payment will liquidate the loan. What is the PV of the 1st 6 payments? a. P21,304.489 b. P23469.232 c. P2130.449 d. P31,936.854PLEASE SHOW YOUR EXCEL FORMULASQUESTION: Consider two mutually exclusive investment alternatives given in the table below. Which project would be selected based on the rate of return decision (IRR) criterion? (Assume that MARR is 10%.). Hint: RIC Determine the MIRR on the incremental investment. Which project would be chosen at MARR = 10%? Provide your answer in a table with column headers N (year), A1 cash flow, A2 cash flow, A2-A1 cash flow. n Project A1 Cash Flow Project A2 Cash Flow 0 -$12,000 -$15,000 1 $7,500 $8,000 2 $7,500 $14,000 3 $7,500 $5,000 IRR 39.45% 38.27%